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29 January 2016

Insurance Europe: Proposed ESAs' key information document will not allow consumers to make meaningful comparison of investment products


The content and presentation of the KID for PRIIPs, which has been proposed by the ESAs, will make it difficult for consumers to compare investment products, including insurance-based investments, according to Insurance Europe response to ESAs CP.

This is because the key information document (KID) does not take into account the specific features of insurance-based investment products in comparison to other packaged retail and insurance-based investment products (PRIIPs), according to Insurance Europe’s response to a consultation by the European supervisory authorities (ESAs) on the draft regulatory technical standards (RTS) on the content and presentation of the KID.

William Vidonja, head of conduct of business at Insurance Europe, said: “Insurance-based products provide additional benefits and protection, such as a guarantee of a given investment performance or protection against biometric risks. To enable consumers to make a meaningful comparison, the KID should separate the full biometric risk premium from the investment costs. In addition, insurance-based investment products are usually long-term investments. With this in mind, all sections of the KID should allow for a meaningful comparison between products that are both short and long-term, which is not currently the case. It is disappointing that comparability, which is the aim of the PRIIPs regulation, would not be achieved.”

Insurers are also concerned that the majority of the application timeline has been taken up with work on Level 2 measures. As a result, insurance companies will only have between three to four months to implement the KID. The sophisticated methods which need to be implemented by the industry for the KID will require important modifications to IT systems which technically cannot be achieved in only a few months.

Vidonja commented: “The insurance sector needs sufficient time to program, test and launch the PRIIPs KID correctly, so that it delivers its objectives and allows consumers to better compare and understand these products. Unfortunately the current timeline is completely unrealistic. Consequently, a one-year extension of the PRIIPs application date is required to ensure that consumers receive the best outcome.”

Press release

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